Moving money offshore

By Staff Writer
In the National Budget Speech in February, Finance Minister Nhlanhla Nene announced that there would be relaxation of exchange controls. This means that it would be easier for people to move money offshore.
However, Andy Rissik, managing director of Sable Forex, noted that the paperwork demands for moving money offshore are still an obstacle.
Rissik revealed: “High Net Worth (HNW) individuals were pleased to receive some relief when South African residents’ foreign capital allowance increased from R4 million to R10 million per calendar year or on emigration, or R20 million per family, but many of our clients are experiencing long delays in their increased capital allowance being approved.”
The cost of moving money offshore
When moving money offshore with a bank or a bureau, Rissk pointed out that the cost of moving the money will differ.
There are three costs involved in the process:
1.       Transaction fees will cost between R250 and R700 per transaction.
2.       A commission of about 1.5% will be charged. However, Rissik noted that currency shops will charge up to 4% in commission.
3.       Currency margin will also be involved. Rissik explained: “[This is] the profit from what they buy the currency and what they sell it for.”
According to Rissik, “Sable only make money on the currency margin. [We] do not charge a transaction fee or commission.”
Rissik highlighted that there are no hidden transaction costs when customers use Sable. According to him, some financial institutions will quote a rate, but not include the commission, which is charged at a later date.
Getting a tax clearance certificate from SARS
Getting the necessary tax clearance certificate from the South African Revenues Service (SARS) can be a problem, according to Rissik. He noted that SARS have not yet adapted their systems to allow for the addition increase the foreign capital allowance to R10 million.
“The additional amount over R4 million is a special application, which triggers a tax audit. At Sable, we assumed SARS would issue tax certificates to R10 million, but they are not doing this yet.  As far as we know, none of our clients have been given tax clearance to 10 million,” revealed Rissik.
According to Rissik, one of the problems that people experience when applying for a tax clearance certificate is time delays.
“If a client doesn’t know what to ask for and what to complete, there can be confusion and time delays.  One of our clients applied for his own tax clearance certificate which took four visits to SARS.  At Sable, we send documents to a client, we collect all the paperwork, [and] we make sure we have everything from the client. We go and queue on their behalf.”
Tips for getting your money offshore quickly
Although you can’t avoid all the legal and administrative requirements needed to move money offshore, Rissik highlighted that there are three ways to ensure that the process is completed as quickly as possible.
1.       Use an authorised forex broker:The public cannot directly transact with the South African Reserve Bank (SARB), however, Rissik emphasised that banks are not the only institutions that are authorised to move money internationally. People can make use of non-bank forex brokers as well.
2.       Ensure all your SARS paperwork is up-to-date and all your tax affairs are in order:Despite the relaxation of exchange controls, SARS still require a lot of paperwork to be completed before the money can be transferred.
Rissik explained: “Since the change in legislation in February, SARS will issue a tax certificate for the original R4 million, but our clients have to apply for tax clearance for the additional R6 million, to reach the new total of R10 million.”
3.       Ensure you have all the required paperwork and exchange control requirements available when applying:Make sure that you have the required tax clearance certificates and any other documentation that may be required before applying for the money transfer.
Rissik suggested: “Before a client makes any commitment to an offshore investment of more than R4 million, ensure they have a tax clearance certificate before signing any documents.  Delays in receiving the tax clearance certificate can put a client at a disadvantage and they can lose a deposit on a property they are purchasing offshore.”
According to Rissik, it can take two days to get the tax clearance certificate and to move under R1 million offshore. For under R4 million it can take two weeks, while amounts over R4 million can take a couple of months to get the necessary paperwork and move the money offshore.

Recent Articles

Featured Offshore investing 101 – how much should you invest?

Offshore investing has significant financial advantages. We explore how to invest offshore and what it takes to secure great portfolio performance.

When should you invest rather than save?

Extra cash left at the end of the month? We have a look at the differences between saving and investing, and we find out how you should decide which one to pursue.

Investing for your retirement – which product to use?

Retirement annuities (RAs) and tax-free savings accounts (TFSAs) - which is better when planning for your retirement?

3 Reasons for early entry to a retirement village

Your parents may envision their golden years on the porch of your childhood home. However, it’s good to look at the benefits of joining a retirement village.

Latest Guide

Guide to debt rehabilitation solutions